Gold
Gold prices have paused in their ascent amidst a strong spate of recent buying in USD in response to the latest US labour reports. The July NFPs, released on Friday, came in above expectations at 1.763 million. While marking a slight reduction from the prior month’s 4.79 million figure, job growth over the month was still higher than the 1.5 million figure the market was looking for and has helped to assuage fears that the US economic recovery is running out of steam. Away from the headline release, the US unemployment rate was also seen improving over the month, moving back down to 10.9% from the prior month’s 12.3%. This again was better than the 11.1% figure the market was looking for. The Dollar was also bolstered by the average earnings figure which came in at 0.2%, well above the -0.5% figure expected and marking a firm improvement from the prior month’s -1.3% reading.
With the US employment picture looking encouraging, the USD sell off has paused for now which, in turn, has seen a loss of upside momentum for gold. Despite this, the outlook for gold remains positive given the broader risk factors which include growing concerns over a potential second wave of COVID-19, political uncertainty ahead of the US elections and residual tensions between the US and China.
Silver
Similar to what we’ve seen with the price action in gold, the silver market has lost upside momentum amidst the current USD rebound. Prices have recently appreciated to their highest level since 2011 as a result of the weakness in USD over recent weeks which, despite the current pause, looks likely to continue. Silver prices have also been well supported by the upside moves in equities which remain well bid, despite the USD recovery, and look set to continue higher, keeping the near term outlook bullish for silver.
Technical Views
GOLD (Bullish above 1979.25)
From a technical viewpoint. Gold prices have now blown well above the prior all tie highs of 1824.56 to trade a fresh high watermark of 2076.12. Despite the current pause, the outlook remains bullish while prices remain above the 1979.25 level. Should price move below that level, the next key support is down at the 1824.56 level where the 50dma is currently sat also.
SILVER (Bullish above 25.0756)
From a technical viewpoint. The rally in silver has seen prices moving above the 27.3955 level. The move has been an explosive one and while there are risks of a pullback, while the 25.0756 level remains intact, the outlook remains bullish in the near term.
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Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!